GlossaryEN1 min readUpdated: Jun 26, 2026

external costs

External costs are economic burdens generated by an actor that are not borne by that actor but fall instead on third parties or society as a whole.

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Last updated: 26 June 2026Published: 27 January 2026

Source: https://ec.europa.eu/transport/themes/sustainable/studies/external-costs_en

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Logistics Concept

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Definition & Explanation

External costs are economic burdens generated by an actor that are not borne by that actor but fall instead on third parties or society as a whole. In transport, typical examples include air pollution, noise, greenhouse gas emissions, accident costs, and wear on public infrastructure. Because these costs are absent from market prices, transport services are effectively underpriced relative to their true societal impact. External costs stand in contrast to internal costs, which appear directly in a company's accounts. Quantifying them is a prerequisite for policy instruments such as road pricing, emission charges, or carbon taxes that aim to make transport users pay the full cost of their activities.

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external costs

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